24 Sep 2017

NHFPC’s new policy regarding investment in the medical field

Under the Foreign Investment Catalogue Guide (Revision 2017), foreign investment in medical institutions is always highly restricted. In China, Medical institutions can only be established in the form of an equity joint venture or cooperative joint venture. Besides, foreign investors may face operational difficulties due to a strict and time-consuming approval procedure.

In August 2017, National Health and Family Planning Commission (“ NHFPC”) released 《关于深化“放管服”改革激发医疗领域投资活动的通知》(“the Circular”), with the aim to deepen the reform in the field of public healthcare. The Circular sets out a series of reform measures to encourage foreign investment in the medical industry, the key points are summarized below:

1. Application to set up an internal clinic in a nursing home is no longer required whereas approval was required under the previous policy.

Previously, foreign investors must apply to set up a practice with registration and license at the relevant health and family planning department under the Ministry of Civil Affairs, Health and Family Planning Commission on the Licensing for Medical Institutions, Functions of Elderly Care, which took effect in 2006. Now, the filing system under the Circular simplifies the set up process of clinics in nursing homes. Undoubtedly, the elderly in nursing homes will benefit from these changes.

2. Medical institutions are further classified under various subtypes including rehabilitation centers, nursing centers, central sterile supply department, health examination centers and small/medium-sized ophthalmology hospitals. Particular set-up standards and management practices are under the NHFPC.

3. The set up approval and practice registration for a Second-Class medical institution can be combined in one application and even further simplification of the approval procedure for a Third-Class hospital.

4. In order to strengthen investment in the healthcare sector, there is no restriction under the Circular of the ratio of equity or rights and interest of the Chinese party in a clinic, of which the ratio shall be no less than 30% according to Article 8 of Provisional Measures for the Administration of Medical Institutions.

The provisions in the Circular are all principle-based. Therefore, it is advisable that investors should pay close attention to the promulgation of the detailed implementation rules in the near future.